Phadett Tooksoon Supee Sukijniyakorn Sumonmal Atthawutthichai

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Phadett Tooksoon Supee Sukijniyakorn Sumonmal Atthawutthichai

Phadett TooksoonSupee SukijniyakornSumonmal Atthawutthichai


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, JapanDo Networking with Information Providers Lead to Export Performance: APreliminary AnalysisPhadett Tooksoon, Supee Sukijniyakorn, Sumonmal AtthawutthichaiRajamangala University of Technology Lanna Tak, Thailand0012The Asian Business and Management Conference 2012Official Conference Proceedings 2012AbstractFirm’s external network can contribute to export performance. The finding shows that,Thai’s firms invested resources towards building relationship with business networks.Government agency, financial institution, business association, and knowledgeinstitution follow this. The regression analysis revealed that resources invested innetworking explain the variations in three dimensions of export performance namelyfinancial measure, export market penetration, and export success. The result foundthat the investment in developing of the business network and financial institution arestatistically significant and positively related with two dimensions of exportperformance in term of financial measure and export success while only financialinstitution is statistically significant and positively related to export performance interm of export market penetration. On the other hand, investment of resources bygovernment agencies negatively related to export performance in term of financialmeasure. However, investment of resources by business association and knowledgeinstitution are not significant all of three dimensions of export performance.Keywords: Networking Resources, Export Performance, Thai Exporters, Thailand.iaforThe International Academic Forumwww.iafor.org15


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, Japan1. IntroductionThe competitiveness and hence performance of a firm depends on its ability to mobilizeavailable resources within the firm as well those available outside the firm. Almost everynation in the world provides infrastructure to facilitate the business operations to ensureeconomic growth. This is more so when the economy is dependent on external market.Therefore firm with limited resources can enhance their competency by soliciting resourcesmade available through public programs and other services offered by external parties. It iscontingent upon the firm to commit and invest resources to network with these serviceproviders. This paper presents the finding of a survey on the extent of resources committedtowards building relationship with various service providers among exporting firms inThailand.2. Literature ReviewNetworking Resources and Export PerformanceSeveral scholars have conceptualized social capital as a set of social resources embedded inrelationships (e.g., Burt, 1992; Loury, 1977). Other scholars, however, have espoused abroader definition of social capital, including not only social relationships, but also thenorms and values associated with them (e.g., Coleman, 1990; Portes and Sensenbrenner,1993; Putnam, 1995). Social capital encompasses many aspects of a social context, such associal ties, trusting relations, and value systems that facilitate actions of individuals locatedwithin the context (Tsai and Ghoshal, 1998). Social capital can be conceptualized andoperationally defined at many different levels of analysis, including individuals (Belliveau,O’Reilly and Wade, 1996), organization (Burt, 1992), inter-organizational arrangements(Baker, 1990), and societies (Putnam, 1995). Social capital theory suggests that a firm’snetworks from a major contributor to its performance (Leenders and Gabbay, 1999).Firms from newly industrializing nations lack the necessary resources to internally generatecapabilities crucial to go international and succeed in the global markets. Accumulatingknowledge about foreign markets will take time and require top management to commitresources (Johanson and Vahlne, 1977; Johanson and Mattsson, 1988). Firm specificadvantages can be enhanced through networking with external organizations. According toPfeffer and Salancik (1978), institutional networks ties relate to the linkages among variousdomestic institutions such as government officials and agencies, banks and financialinstitutions, universities, and trade association can help the firm to access to resources notavailable within the firm. Therefore the export performance of firms from newlyindustrializing nations is contingent upon their desire to learn and network. This argument isthe core idea in the network approach to internationalization, which suggests that a firm’sexternal network is important to its performance.The previous study of Coviello and Munro (1995), identified that through the use of networkrelationship in overseas market were able to instigate rapid internationalization in diversemarkets with major partners often guiding foreign market selection and providing themechanism for market entry. According to Ghauri, Lutz and Tesfom (2003), explained thatthe network’s success in penetrating foreign markets, access to foreign marketing experienceand marketing knowledge and access to support infrastructure facilitate network development.Beside Liu and Beamish (2001), confirmed the importance of alliance partners with certainkinds of local knowledge for supporting successful overseas expansion. The previous studyby Collinson and Houlden (2005), explained that network relationships are found to stronglyinfluence managerial cognition and thereby internationalization decision-making.16


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, JapanConsequently, Guillen (2002), concluded that firms belonging to the same business networkcan gain precious information and experience, and the possession of network ties withbusiness parties in the home country facilitates is important in international venturingactivities.The previous studies, evidence from New Zealand the study of Chetty and Holm (2000);Chetty (2003), found that that business networks is an important to internationalization, andalso enable them to proceed faster with their international growth. Evidence from German thestudy of Ritter & Gemunden (2003), found that network competence has a strong positiveinfluence on the extent of technological collaboration between organization and the firm’sproduct and innovation process success. Evidence from Australia the study of Mort andWeerawardena (2006), found that networking capability a key role in internationalization ofthe born global firm, and facilitates the development of knowledge-intensive and innovativeproducts, resulting in superior international market performance in term of rapid entry tomultiple international markets. Evidence from China the study of Yiu, Lau and Burton (2007),found that business network ties (consists of customers and suppliers) and institutionalnetwork ties (consists of government agency, financial institutions and trade associations) ispositively related with international venturing. While, evidence from Thai’s firms byPongpanich and Phitya-Isarakul (2008), found that business network include grower,exporters, and freight providers to importers are important for competitiveness and exportperformance of Thai fruit exports in Chinese market.The relationship of networking is important to Thailand manufacturing exporting firm. In thisstudy the organizations of networking consists of; Department of Export Promotion (DEP)Thai, The Broad of Investment of Thailand (BOI), Export-Import Bank of Thailand (EXIMBank), Small and Medium Enterprise Development Bank (SME Bank), Commercial Bank,Insurance Company, Thai Chamber of Commerce, Thailand Exporter Association, and ThaiPackaging Association etc.Export PerformanceThis study export performance is the dependent variable in the simplified model and isdefined as the outcome of a firm’s activities in export market (Shoham, 1996). Matthyssensand Pauwels (1996), explained that there are two principle ways of measuring exportperformance: the first is economic which included financial measures such as sales, profitsand market share and the second is non-economic which included non-financial measuresrelating to product, market, experience elements etc. Compared to financial measures, whichare more objective, the non-financial measures of export performance are more subjective.The “success” category comprises measures such as the managers’ belief that exportcontributes to a firm’s overall profitability and reputation (Raven, McCullough and Tansuhaj,1994), “satisfaction refers to the managers’ overall satisfaction with the company’s exportperformance, and “goal achievement” refers to managers’ assessment of performancecompared to objectives (e.g. Katsikeas, Piercy and Ioannidis, 1996). Finally, there is threeprinciple ways of measuring export performance in term of financial measures, export marketpenetration, and export success (Cavusgil and Zou, 1994; Matthyssens and Pauwels, 1996;Zou and Stan, 1998; Katsikeas, Leonidou and Morgan, 2000).In this study, export performance has a dependent variable is also more broadly specifiedincluding measures of export sales growth, export profit margin, perceived export success,achievement of export objective, export market penetration in current market, export marketpenetration in new market and satisfaction with overall export performance. Based on the17


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, Japanliterature reviews, this study seeks to answer the following research questions: Whichnetworking are resources contribute to export performance?These relationships are presenting in Figure1.NetworkingResources- Government agency- Financial institution- Business association- Knowledge institution- Business networkH1Export Performance- Financial measure- Export market Penetration- Export successFigure 1 Conceptual FrameworkBased on the conceptual framework, we lead to following hypothesis:H1: Networking resources have a positive relationship with export performance.H1a: Government agency has a positive relationship with export performance.H1b: Financial institution has a positive relationship with export performance.H1c: Business association has a positive relationship with export performance.H1d: Knowledge institution has a positive relationship with export performance.H1e: Business network has a positive relationship with export performance.3. MethodologyThis is a cross-sectional study using mail survey. The highly structured survey instrumentswere mailed to managers in the manufacturing exporting firm’s form listed in directory ofDepartment of Export Promotion (DEP) Thai. A total of 113 usable returns were receivedgiving a response is 15.26 %. The profile of firms participating in this survey is presented inTable 1. A total of 15 organizations, which are thought to be capable of providing usefulinputs to exporters, are identified. The respondents are requested to indicate to what extenttheir company has committed resources towards establishing relationship with listedorganizations on a 5-point scale ranging from 1= not at all to 5= a great extent. As regards toperformance, both economic and non-economic measures of export performance were used.The response to economic measures are solicited a 5-point scale from 1= much belowexpectation to 5= much above expectation, non-economic measures are solicited a 5-pointscale from 1= not at all satisfied to 5= very satisfied.Table 1 General Characteristics of the Respondents (n = 113)Demographic Categories Number of Respondent PercentageFirm Size1. SMEs (1 200 employees)1. Below 10 years2. 11-20 years3. More than 21 years1. Below 10 years2. 11 - 20 years3. More than 21 years3648246932933.344.422.262.729.18.218


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, JapanSeparate ExportDepartmentAverage Percentage ofExport Sales1. Yes2. No1. Below 25%2. 26 – 50%3. 51 – 75%4. More than 76%86272516125376.123.923.615.111.350.0Data AnalysisTable 2 displays the mean and standard deviation the extent of networking resources bymanufacturing exporting firms in Thailand. The ranking of the mean values shows that Thai’sfirms committed resources towards establishing relationship with business network (3.14) ishigher compared to government agencies (2.82), financial institution (2.78), businessassociation (2.54), and knowledge institution (2.04). On the ranking of all items measuringnetworking resources, it is noted the top three items that register the highest mean value are1) Commercial Bank; 2) Department of Export Promotion: DEP Thai; and 3) Transportation& Logistics Companies. The findings show that Thai’s exporters perceived they do not havethe relationship with respect to 3 organizations they are 1) Thai Packaging Association (meanvalue = 2.08); 2) University Professor (mean value = 2.08); and 3) Media Organizations(mean value = 1.79).Table 2 Networking ResourcesDimension of Networking ResourcesMeanGovernment Agencies1. Department of Export Promotion: DEP Thai 3.272. The Broad of Investment of Thailand: BOI 2.37Overall Mean (Std. Div.) 2.82 (1.01)Financial Institution1. Export-Import Bank of Thailand: EXIM-Bank 2.302. Small and Medium Enterprise Development Bank: SME Bank 2.153. Commercial Bank 3.764. Insurance Company 2.92Overall Mean (Std. Div.) 2.78 (.89)Business Association1. Thai Chamber of Commerce 2.882. Thailand Exporter Association 2.653. Thai Packaging Association 2.08Overall Mean (Std. Div.) 2.54 (1.05)Knowledge Institution1. University Professor 2.082. Research Institute 2.253. Media Organization 1.79Overall Mean (Std. Div.) 2.04 (.89)Business Network1. Transportation & Logistics Companies 3.252. Distributors & Export Trading Company 2.953. Raw Material Suppliers 3.23Overall Mean (Std. Div.) 3.14 (1.02)5-point scale ranging from 1= not at all to 5= a great extent19


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, JapanExport performance (refer Table 3). The pattern of mean values shows that Thai agro-basedexporters invest resources more in developing export sales growth (mean value = 2.76), andexport profitability (mean value = 2.38, export market penetration in current market (meanvalue = 2.54), and export market penetration in new market (mean value = 2.05), perceivedexport success (mean value = 2.58), achievement of export objectives (mean value = 2.56)and satisfaction with overall export performance (mean value = 2.50).Table 3 Export PerformancesDimension of Export PerformanceMeanFinancial Measure*1. Export sales growth 2.762. Export profitability 2.38Overall Mean (Std. Div.) 2.57 (.86)Export Market Penetration**1. Export market penetration in current market 2.542. Export market penetration in new market 2.05Overall Mean (Std. Div.) 2.30 (.96)Export Success**1. Perceived export success 2.582. Achievement of export objectives 2.563. Satisfaction with overall export performance 2.50Overall Mean (Std. Div.) 2.55 (.97)* 5-point scale 1= much below expectation to 5= much above expectation,** 5-point scale 1= not at all satisfied to 5= very satisfied.CorrelationTable 4 the correlations between dimensions of networking resources and export performanceof financial measure show that financial institution (r = .31, p < .01), business association (r= .23, p < .05), knowledge institution (r = .23, p < .05), and business network (r = .35, p< .01) are positively and significantly correlated with financial measure. The correlationsbetween dimensions of networking and export market penetration show that financialinstitution (r = .37, p < .01), business association (r = .24, p < .05), knowledge institution (r= .19, p < .05), and business network (r = .33, p < .01) are positively and significantlycorrelated with export market penetration. The correlations between dimensions ofnetworking and export success show that government agencies (r = .21, p < .05), financialinstitution (r = .36, p < .01), business association (r = .24, p


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, JapanEPPEN .18 .37** .24* .19* .33** .62** 1EPSUC .21* .36** .24* .14 .35** .60** .89** 1GOV = Government Agencies, FIN = Financial Institution, BUSA = Business Association,KNO = Knowledge Institution, BUSN = Business Network, EPFI = Export Performance(Financial Measure), EPPEN = Export Performance (Export Market Penetration), EPSUC =Export Performance (Export Success).4. The Study FindingsIn order to determine if the investment of resources in networking contributes to thevariations in export performance, a multiple regression analysis is conducted. The results ofregressions analysis on the effect of networking resources on export performance arepresented in Table 5.Table 5 Multiple Regression Analysis (Networking Resources and Export Performance)VariablesFinancialMeasureExport MarketPenetrationExportSuccessBeta t-value Beta t-value Beta t-valueGovernment Agencies -.24** -2.13 -.05 -.46 .01 .10Financial Institution .27* 1.70 .42** 2.60 .38** 2.36Business Association -.12 -.79 -.22 -1.40 -.20 -1.30Knowledge Institution .14 1.33 .03 .29 -.06 -.55Business Network .30** 2.39 .20 1.58 .24* 1.89R 2F-value.184.68***.174.28***.174.32***Note ***Sig p < .01, **Sig p < .05, *Sig p < .10The dimension of export performance in tern of financial measure in Table 5 (Colum 2), theaddition of the five networking resources has resulted in R 2 is .18 is significant (p < .01)which implies that the networking resources explained an additional 18% of the variation infinancial measure. F-statistics (p < .01) is significant suggesting that the model is adequate.From the regression model, it can be observed that financial institution (β = .27, p


The Asian Business and Management Conference 2012Official Conference ProceedingsOsaka, JapanThe dimension of export performance in tern of export success in Table 5 (Colum 4), theaddition of the five networking resources has resulted in R 2 is .17 is significant (p < .01)which implies that the networking resources explained an additional 17% of the variation inexport success. F-statistics (p < .01) is significant suggesting that the model is adequate.From the regression model, it can be observed that financial institution (β = .38, p < .05) andbusiness network (β = .24, p < .10) are statistically significant and has a positive relationshipwith export success. On the other hand, government agencies, business association, andknowledge institution does not have a significant relationship with export success.5. DISCUSSIONFrom the Social Capital Theory (SCT) is supported of this study, the previous study byLeenders and Gabbay (1999), explained that a firm’s networks from a major contributor to itsperformance. However, resources to be invested in accumulating knowledge and managerialcapability are crucial. The outcome of that investment can be a source of competitiveadvantage as the managerial talent, technology and knowledge as these resources.Opportunities are abound for a firm with limited resources to source information andknowledge from external organizations. The finding of this study shows that allocation ofresources towards these activities explains the variation in export performance. This isparticularly with respect to developing relationship and networks among business associates.This finding is consistent with Chetty and Holm (2000), explained that business networks isan important to internationalization, firms interact with their network partners to extend,penetrate and integrate their international markets. Networks can help firms exposethemselves to new opportunities, obtain knowledge, learn from experiences, and benefit fromthe synergistic effect of pooled resources in engaging in international venturing activities.In Thailand financial institution and business network are an important with Thai’s exportersin international market. This finding supported by Yiu, Lau and Burton (2007), explainedthat business network ties (consists of customers and suppliers) and institutional network ties(consists of government agencies, financial institutions and trade associations) are positivelyrelated with international venturing. While the study of Pongpanich and Phitya-Isarakul(2008), explained that business network includes grower, exporters, and freight providers toimporters are important for competitiveness and export performance of Thai fruit exports inChinese market. However, evidence from Thailand is indicating that networking withknowledge institution is relatively weak. Managers should be encouraged to explore linkageswith these knowledge resources. The insignificant of investing resources in buildingrelationship with these institutions in explaining export performance is not surprising.Because the previous study found export promotion programs has produced mixed results.The kind of assistance needed by exporters differ across firms’ level of export involvement(Kotabe and Czinkota, 1992). It appears that firms’ own experiential knowledge andknowledge from parties closely associated with their business is more valued.22


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